While some people gloss over the money issues in their eagerness to become parents, financial planning is a critical part of the adoption process and shouldn't be given short shrift, according to financial advisers and lawyers. By understanding what adoption costs, budgeting for it and preparing for potential pitfalls, prospective parents can help ensure that the process goes smoothly and the family's finances remain secure.

Money rarely drives adoption decisions, of course, and few people if any go into the process expecting to pay nothing. But some adoptive families are surprised at how much they actually end up shelling out.

"Unanticipated issues can arise, which can drive up the cost of an adoption higher than expected, even when the matter is handled properly and professionally by those involved," says
Douglas Donnelly,
an attorney in Santa Barbara, Calif., who is also the ethics committee chairman of the Academy of California Adoption Lawyers.

Weigh the Choices

The least expensive type of adoption typically involves children in foster care, many of whom have special needs or multiple siblings. Fees range from nothing to about $2,500, and states often provide subsidies to encourage the adoptions.

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Adoptions through a licensed private agency, on the other hand, can run anywhere from $5,000 to $40,000, according to a 2011 fact sheet published by the Child Welfare Information Gateway. So can adoptions handled by unlicensed facilitators, who are illegal in many states.

An independent adoption, which is typically handled by a lawyer and may involve paying for a birth mother's medical expenses, might run $8,000 to $40,000. An international adoption can average $35,000 to $50,000, attorneys say.

In addition to court and other legal expenses, adoption fees may cover things such as home evaluations and post-placement supervision and paperwork processing.

However, unexpected costs often crop up.
Christopher Parr,
a Columbia, Md., financial adviser, recommends clients budget for costs to be at least 20% higher than they originally estimated.

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Those pursuing international adoptions might find themselves facing unexpected lodging and meal expenses. Mr. Parr says he has even heard of people having to provide tips to service providers for "going the extra mile" on an adoptive parent's behalf in certain foreign countries.

Advertising is another expense that can add up quickly in states where adoptive parents are allowed to advertise for a birth mother.
Jeanine Castagna,
an attorney in Garden City, N.Y., says she has had clients spend $500 to $2,000 a month for 18 months on such ads.

Mr. Parr suggests prospective parents seek recommendations from professionals in the field and from families who have been through the process when deciding which type of adoption to pursue. He also recommends that parents interview several agencies and attorneys to ensure they're experienced with adoptions to help avoid scams.

Make a Financial Plan

Setting an adoption budget early on and sticking to it as much as possible is important, says
Mark McDermott,
a Washington lawyer and past president of the American Academy of Adoption Attorneys.

This can be hard if a couple is desperate to have a child. But he says sticking to a budget can help prospective parents maintain financial boundaries, such as not paying for a birth mother's living expenses, which some states prohibit anyway. It also may help couples think twice before falling for adoption scams that involve sending payments to a "birth mother" who isn't pregnant, or giving money to an agency that isn't forthcoming about its fees, he says.

As part of the adoption process, prospective parents typically are required to prove they are financially sound. As such, they should prepare for an adoption almost as if they were preparing to apply for a loan, says
Chip Workman,
a financial adviser in Cincinnati.

Prospective parents should be able to demonstrate that they have sufficient income to support their housing and living needs. This figure can range widely in terms of what's appropriate by region of the country, Mr. Workman says.

Adoptive parents also need to think about the continuing expenses that occur throughout a child's life. An adopted child, for example, may need counseling for prior emotional traumas, so that should be factored into the financial plan, some advisers say. So should a college education, especially if the child being adopted is older, says
Andrew Wigzell,
a financial planner at
MetLife
in Shelton, Conn.

File for Assistance

Adoption may have a steep sticker price, but there is plenty of assistance available to help offset the cost.

Many families can take advantage of the federal adoption tax credit, which Congress extended in the recent fiscal cliff legislation. The maximum credit for 2013 is $12,970, and the full credit is available to taxpayers with a modified adjusted gross income of $194,580 or less, says Mr. McDermott. The credit phases out completely for those with adjusted gross incomes of $234,580 or more, he says.

Parents who adopt children with special needs may be eligible for special tax credits and subsidies. The definition of special needs may vary from state to state, but generally includes those with physical, mental, emotional and/or learning delays and disabilities, siblings who must stay together, or any other condition that may make it more difficult to find an adoptive family, says
Wendy Hartmann,
a Los Angeles attorney.

A growing number of employers also offer adoption benefits to their workers, according to the National Adoption Center.

The military, meanwhile, provides active-duty personnel a reimbursement for most one-time adoption costs, up to $2,000 per child. The maximum amount available in a given year is $5,000, even if both parents are in the military.

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